Friday, January 25, 2013

Yesterday, in Aryeh v. Canon Business Solutions, Inc., ___ Cal.4th ___ (Jan. 24, 2013), the Supreme Court held that common-law rules governing claims accrual (including the delayed discovery rule, the doctrine of equitable tolling, fraudulent concealment, the continuing violation doctrine, and the continuous accrual doctrine) apply to UCL claims -- just as they would to any other claim. The unanimous opinion was authored by Justice Werdegar.

In so holding, the Court relied heavily on the UCL's legislative history, which "indicates
the Legislature intended the UCL’s limitations period to be subject to the
usual judicial rules governing accrual, rather than to special legislatively
declared accrual rules." Slip op. at 7. The opinion goes on:

Section
17208 was passed in 1977 as part of an act that consolidated and recodified
existing state unfair competition laws without substantive change in the
Business and Professions Code. (Stats.
1977, ch. 299, § 1, p. 1203; Assem. Off. of Research, 3d reading
analysis of Assem. Bill No. 1280 (1977-1978 Reg. Sess.) as introduced Mar. 31,
1977, p. 1.) The adoption of an
express statute of limitations was not intended to modify but to clarify the presumed
applicable limitations period. (Assem.
Com. on Judiciary, Bill Digest of Assem. Bill No. 1280 (1977-1978 Reg. Sess.)
p. 1.) On the question of accrual,
legislative committee reports are conspicuously silent, and the enrolled bill
report expressly confirms the understanding that the subject is to be governed
not by statute but by judicial construction:
“Questions concerning the point at which the statute of limitations
begins will be left to judicial decision.”
(Governor’s Off. of Legal Affairs, Enrolled Bill Rep. on Assem. Bill No.
1280 (1977-1978 Reg. Sess.) June 27, 1977, p. 1.) It thus appears the Legislature, by passing a
bare-bones limitations statute and delegating to the judiciary the task of
defining the point of accrual in particular cases, left courts free to
determine whether the circumstances in each case call for application of either
the general last element rule of accrual or any of its equitable exceptions.

Slip op. at 7-8 (emphasis added).

The Court also approved much of the reasoning in Broberg v. The Guardian Life Ins. Co., 171 Cal.App.4th 912 (2009) (discussed in this blog post). The opinion reads:

Broberg
involved a statute of limitations challenge to a claim of deceptive practices
under the UCL. The court reasoned that
the underlying nature of the claim, not its form, should control. (See Jefferson
v. J. E. French Co. (1960) 54 Cal.2d 717, 718 [“[T]the nature of the right sued upon, not the
form of action or the relief demanded, determines the applicability of the
statute of limitations.”].) Consequently, that the cause of action was
pleaded under the UCL should not preclude application of an equitable exception
to the usual accrual rule; just like common law claims challenging
fraudulent conduct, a UCL deceptive practices claim should accrue “only when a
reasonable person would have discovered the factual basis for a claim.” (Broberg,
at pp. 920-921.) Broberg
is consistent with both our precedent and the absence of anything in the text
or legislative history of the UCL establishing a legislative desire either to
categorically limit or categorically guarantee the application of common law accrual
exceptions under the UCL.

Broberg also highlights an aspect of the statutory scheme salient for
limitations purposes: the UCL is a
chameleon. The UCL affords relief from unlawful,
unfair, or fraudulent acts; moreover, under the unlawful prong, the UCL “ ‘ “borrows”
violations of other laws and treats them as unlawful practices’ that the unfair
competition law makes independently actionable.” (Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20
Cal.4th 163, 180.) Depending upon which
prong is invoked, a UCL claim may most closely resemble, in terms of the right
asserted, an action for misrepresentation (e.g., Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310), misappropriation
(e.g., Glue-Fold, Inc. v. Slautterback
Corp. (2000) 82 Cal.App.4th 1018),
price fixing (e.g., Clayworth v. Pfizer,
Inc., supra, 49 Cal.4th 758), interference
with prospective economic advantage (Korea
Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134), or any of countless other common law and
statutory claims. Given the widely
varying nature of the right invoked, it makes sense to acknowledge that a UCL
claim in some circumstances might support the potential application of one or
another exception (e.g., Broberg v. The Guardian Life Ins. Co. of America, supra,
171 Cal.App.4th at pp. 920-921), and
in others might not (e.g., M&F
Fishing, Inc. v. Sea-Pac Ins. Managers, Inc. (2012) 202 Cal.App.4th 1509,
1531-1532 [concluding that while in theory delayed discovery might preserve an
unfair competition claim, the nature of the particular UCL claim asserted precluded
its application]). [1]

Accordingly, we conclude the UCL is governed by common law accrual
rules to the same extent as any other statute. That a cause of action is labeled a UCL claim
is not dispositive; instead, “the nature of the right sued upon” (Jefferson v. J. E. French
Co., supra, 54 Cal.2d at p. 718) and the circumstances attending its invocation
control the point of accrual. The common
law last element accrual rule is the default (see Neel v. Magana,
Olney, Levy, Cathcart & Gelfand, supra, 6
Cal.3d at p. 187), while exceptions to that rule apply precisely to the extent the
preconditions for their application are met, as would be true under any other
statute. We disapprove Snapp& Associates Ins. Services, Inc. v. Robertson, supra, 96 Cal.App.4th 884, and Salenga v. Mitsubishi Motors Credit of
America, Inc., supra, 183
Cal.App.4th 986, to the extent they hold otherwise.

[1] As well, the UCL and its remedies are equitable. (Korea
Supply Co. v. Lockheed Martin Corp., supra,
29 Cal.4th at p. 1144.) It would be inconsistent to conclude that
while equity may drive the availability of remedies under the UCL, equitable
exceptions have no place in determining whether a claim for relief has been timely
asserted in the first instance.

Slip op. at 10-12 (emphasis added).

The opinion then holds that in this particular case, the complaint adequately pleaded "a recurring unfair act," which was sufficient to support application of the continuous accrual doctrine. Accordingly, the trial court erred in sustaining the defendant's demurrer without leave to amend. Id. at 14-20.

In theory, the Court could have considered only the continuous accrual doctrine, held that it applied to UCL cases (including this case), and left the other doctrines for another day. It did not, perhaps because the rationale for its decision would be identical for all the doctrines. The approach also promotes judicial economy by resolving the split in authority among the lower courts, which revolved around the delayed discovery rule in particular.